Retrospective taxability of forfeited advances rejected where Section 56(2)(ix) did not apply to the relevant assessment year.

Forfeited advances could not be taxed as income from other sources under Section 56(2)(ix) for Assessment Year 2012-13 because that provision was inserted by the Finance Act, 2014 with effect from 1 April 2015. As no material supported retrospective operation, the addition was held unsustainable and was directed to be deleted.

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Issues: Whether forfeited advances could be taxed as income from other sources by applying Section 56(2)(ix) of the Income-tax Act, 1961 to Assessment Year 2012-13.

Analysis: The addition was based on treating the forfeited advances as income from other sources under Section 56(2)(ix). That provision was inserted by the Finance Act, 2014 with effect from 01.04.2015, whereas the assessment year in appeal was 2012-13. No material was shown to support retrospective operation of the provision.

Conclusion: The addition was unsustainable and was directed to be deleted.

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